2:16 pm

Wed August 22, 2012

Drought Forces Ranchers Into Difficult Decisions

This is TALK OF THE NATION. I'm Neal Conan in Washington. Parts of the country have suffered from record heat and drought for several years in a row now, and this summer, it's been just brutal. In past programs, we talked with farmers about their crops. Today, we focus on difficult choices facing ranchers and dairy farmers.

Water, grass, hay and other feed are harder to find and more expensive, so they have to decide how many animals to keep, how many to sell, how much food to preserve, what to do if conditions get worse and whether to stay in the business at all. We'd like to hear from dairy farmers and ranchers today. What's changing? How are you managing those changes?

800-989-8255 is the phone number. Email talk@npr.org. You can also join the conversation on our website. That's at npr.org, and click on TALK OF THE NATION. Later in the program, a social worker who specializes in heart transplant cases. But first the drought and its effects on ranchers and dairy farmers. Zack Jones is a fifth-generation cattle rancher. His family owns a 24,000-acre ranch in Haralson, Montana. He joins us now by phone from nearby Townsend. Nice to have you with us today.

ZACK JONES: Thank you, Neal.

CONAN: And what has the drought done to your ranch?

JONES: Well, instead of a light green and rich yellow color in the grass at this time of year, it's primarily a gray or turning white type of color of a grass. Water is more scarce. Small reservoirs that the cattle rely upon heavily to drink from are smaller and murky and muddy. And the air is full with a haze of smoke from either massive prairie fires or fires that are in the forests.

CONAN: And drifting up your way.

JONES: Yeah, and drifting our way.

CONAN: So what kinds of decisions are you thinking about?

JONES: Well, it's ultimately a decision of honesty, you know, assessing that this is a situation that we have to deal with this year. We've been ranching for generations, but every year provides you a different context. And so you need to make the soundest decision you can on the ranch, given the context today, and be honest with yourself.

CONAN: And so that's not easy to do sometimes. Sometimes you prefer to think the facts may change and the rains may come.

JONES: That's right, the rains may come. So through holistic management, we can make the best decision for our community, for our crew, for our land and for our bankers and for our pocketbook.

CONAN: Holistic management, what's that?

JONES: Holistic management is a way to manage and to make decisions that considers the long- and the short-term sustainability of the actions we make with, once again, our land, our people and our money. And that's really where we need to focus when we get in really tough times like this because you need to make sound decisions that don't take from another aspect of life.

CONAN: Well, the decision I assume you're facing now, if that grass is not green, the cattle, well, they've got to eat something.

JONES: That's right. So we have about 70 percent of the grass - well, we have about 30 percent of the grass that we usually would have right now. So the tank is very empty. We had less grass to even start with. So that directly correlates to either running less cattle or having to sell cattle earlier than you'd planned or trying to find grass elsewhere for the cattle that you have.

CONAN: And all of those have financial implications, but if you don't do it, you're going to overgraze your land.

JONES: That's right. You will severely graze your land and set it back further than what it could rebound next year because next year could be dry again, too. That's the assumption you need to make, that the drought may last multiple years. So you need to put the land in a condition that it can also perform next year if nature provides some rain.

CONAN: If - there's also the winter to think about. Are you in a part of the country where you can keep your cattle all winter long? But I presume the grass is gone, going to be under the snow.

JONES: Well, we've made decisions early this summer to sell or to ship off some cattle so we could retain as much grass for the winter as possible instead of having to buy as much hay. We live in an area of Montana that the old fur traders and even in Indian traditional lore talks about our valley being often blown off in the winter because of the strong winds we get, and buffalo would migrate to the Mussleshell Valley to winter.

So we're in a good winter spot. We don't need as much hay, but we do need grass.

CONAN: And what happens if there's a drought next year?

JONES: If there's a drought next year, then it's like double honesty. So you're going to have less grass, your water's going to be in even worse shape, and hopefully the decisions - well, I'll say confidently. Confidently, the decisions we've made this year are going to put us in the best position possible for next year. But it's going to be really hard next year, Neal, if it's dry again, for our neighbors and for actually ranchers and farmers throughout the entire northern Great Plains and Midwest, and in the Southern Plains, our friends in Texas and Oklahoma.

CONAN: Do your neighbors and the other ranchers in the area embrace the same kind of holistic techniques that you were talking about?

JONES: I would say no, they don't. Everybody wants to have a strong, happy family, solid landscape and happy cows. Everybody wants that. It's just a difference in nuance about how we go about achieving that, using things such as holistic plain grazing, holistic land planning, assuming that we're wrong when we manage nature, so you look as soon as possible for the aspects of your management that are adversely affecting the land.

It's just - it's just slight nuances, but in difficult times like this, my family for generations has seen that it pays off, and our close ranches that we work with, as well, I think are in a better position to go into more difficult times. But ultimately, we need all of our neighbors to work together when you get into a drought.

CONAN: Well, Zack Jones, we wish you rain.

JONES: Thank you very much.

CONAN: Appreciate your time today. Zack Jones is a family farmer. He owns a 24,000-acre ranch in Haralson, Montana, and joins us on the phone from Townsend in that state. Norman Dalsted is a professor of agricultural and resource economics at Colorado State University. His research focuses on farm and ranch management and agricultural economics, and he joins us now from member station KCSU in Fort Collins, Colorado. Nice to have you with us today.

NORMAN DALSTED: Thank you very much.

CONAN: And Zack's experience, I suspect - well, I know he's not alone.

DALSTED: No, he's not. You know, basically the High Plains are dramatically affected by this drought, and it's more severe in some areas than others, primarily because it has been going on for, you know, at least two to three years. So it's had some really serious consequences this year because of the weather being so hot and windy and basically no moisture.

CONAN: And so herds, it sounds like, are going to have to contract.

DALSTED: In some cases, yes. Certainly, the ranchers I'm aware of are trying to secure feed sources, whether it be aftermath grazing or reasonable hay or alfalfa, and even some of them are pursuing the idea of moving livestock to different parts of the country to winter.

CONAN: To ship them by truck or by train to a different part of the country.

DALSTED: Yes, usually by truck.

CONAN: And that's - obviously, you're talking about fuel prices there. This is going to have to be - it means the feed is going to have make a major difference in price.

DALSTED: Definitely. You know, I've always been taught by the old-timers that it's probably cheaper to move the factory to the resource than to move the resource to the factory. So the cows are the factory, the grass or hay or forage that's available, aftermath grazing, that becomes the resource.

CONAN: You were talking about grass-fed cattle in the High Plains, obviously there's been some pretty bad heat and drought in the Midwest this summer. Dairy farmers are facing problems, too.

DALSTED: Definitely. If they do not have access to - you know, some of the dairies I work with personally do raise their own feed, you know, and they do have irrigation available to them. They're in a little bit better position than those that are buying most of their feed. Finding availability of good feed and adequate supplies in the terms of corn silage or corn grain and other - alfalfa and other feedstuff, it gets to be a challenge. It's very expensive.

CONAN: Let's get another caller in on the conversation. This is Tom, Tom with us from Altus, Oklahoma.

TOM: Yes, hello.

CONAN: Hi, go ahead, please.

TOM: Yeah, we're calling you from far southwest Oklahoma. We're certainly in about our third year of this extended drought, and the impacts are becoming quite prevalent not only from a crop production standpoint but from reduction in cow herds and just availability of hay and native grasses are certainly being tested.

CONAN: Tested, that's a - you say that word with some degree of, well, care.

TOM: Yes. Well, growing up in western Oklahoma, it's certainly a water desolate part of the nation. But it's a place that I think kind of, you know, your roots run deep, and you learn to put up with the elements and what Mother Nature throws at you. But when you can - you know, encountering your third year of this, it certainly starts to test many things, not only the native grasses but your nerves and your outlook.

And there's certainly some new adjustments that need to be made in the producers in western Oklahoma.

CONAN: Like what?

TOM: We're beginning to see certainly the water, as it goes away and requires you then to look at where you're going to put those cow herds that you certainly spent your lifetime building those genetics and putting that type of cow together. It's something that can't be replaced overnight. But as the water tanks go down, your ponds dry out, your wells begin to drop, you certainly have to take care of those cattle, and that may be liquidating. That may be selling.

And when that happens, then the decision is made do I get back in. And certainly I would hope that your listening audience understands that the producers that are producing our beef cows today, average age is in the upper 50s. So as those producers liquidate and sell out, will they make the decision to come back in and risk this again for another 10, 15, 20 years to build a cow herd back? So that certainly is a decision that needs to be made.

CONAN: Norman Dalsted, it sounds like he's talking about an industry that's transforming even as we speak.

DALSTED: Yes, certainly, you know, and we suffered in Colorado in particular in the year 2002, where we had - I think we had 400,000 mother cows leave the state due to drought conditions, went to eastern Oklahoma, Missouri, Arkansas. Those cows never came back. So our cow herd has still been impacted by a drought that was ongoing 10 years ago, and likely this is going to have a similar impact, where either they move cows, sell them or find some alternative investors to take those livestock on. It's a major issue, major issue, critical right now.

CONAN: Tom, again, we wish there's rain in your immediate future. But thanks very much, good luck to you.

TOM: Thank you.

CONAN: We're talking about how the drought is affecting ranchers and dairy farmers. Give us a call, 800-989-8255. Email us, talk@npr.org. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.

(SOUNDBITE OF MUSIC)

CONAN: This is TALK OF THE NATION from NPR News. I'm Neal Conan. A deep red and orange stretches across much of the U.S. drought monitor's map of the United States, marking areas of severe, extreme or exceptional drought, that stretch from Nevada to Texas to Colorado and Georgia.

In town in Montana, where we talked with Zack Jones earlier, the 10-day forecast shows nothing but sunny skies and temperatures in the 80s, chance of rain - zero percent. Austin, Texas, expects highs in the 90s with some clouds, but there's no rain in the forecast.

These hot, dry conditions are forcing many ranchers and dairy farmers to make difficult choices. We'd like to hear from dairy farmers and ranchers today. What's changing? How are you managing those changes? 800-989-8255. Email us, talk@npr.org. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION.

Our guest is Norman Dalsted, professor of agricultural and resource economics at Colorado State University. His research focuses on farm and ranch management and agricultural economics. Jim Howell is the CEO of Grasslands, a ranch management company which oversees more than 100,000 acres of ranches across three states. His family also runs a 9,000-acre ranch in Colorado. He joins us now by phone from Dennison in the Centennial State. Nice to have you with us today.

JIM HOWELL: Thank you, good to be here.

CONAN: And ranchers, of course, are no strangers to drought, it's part of the job. Maybe it's part of the DNA. But what's different this year?

HOWELL: Yeah, this year is an extreme year. It's comparable to 2002 that Norman mentioned, but I'd say it's worse this year. It's the worst it's been in my lifetime, I'm 43. We had a reservoir dry out on our leased ranch two days ago. It's the first time it'd been dry in my life.

So it's - we've seen this kind of thing before, but it's just more severe and definitely more widespread across the country right now.

CONAN: And what changes does that force you to make?

HOWELL: Well, we've had to make stocking rate decisions this year, reductions in stocking rates. We made those decisions early, back in March and April, determined that we needed to reduce 30 to 40 percent stocking rate, depending on the ranch. And that's enabled us to get through the year with 60 to 70 percent of our normal stocking rates on our Grassland ranches, kind of in aggregate, as well as our ranch, our family ranch, in western Colorado.

But a lot of that is because of the plant grazing, the holistic plant grazing that we do do that Zack mentioned. It's enabled us to build fairly resilient plants through time and to plan a drought buffer so we have grass that we carry over from the previous year that we know we can use when the drought comes. And so that's been a major element of being able to get through this with still a majority of our livestock numbers.

And then our plant grazing methodology itself, we can really ration that grass out precisely with strategic placement of portable electric fence and really get a lot of good out of the country in a way that supports livestock performance, livestock production and also leaves the land in decent shape, so that if it does start raining next year, the land is prepared to receive that rain.

CONAN: You mentioned, though, selling off 30 to 40 percent, depending on the ranch, in the spring. Obviously those cows weigh less in the spring than they would have when you planned to sell them maybe in the fall.

HOWELL: Well, you know, yes and no. When you can perceive the drought coming, getting rid of cattle before everybody else is is somewhat of an advantage. We're a ranch management company, so we - our company itself doesn't own the cattle or the land. We manage those assets for the owners. And uh - so it was definitely a tough decision on their part.

Mostly the cattle that we didn't bring in were yearling cattle that we would've taken in just through the green, growing grass season for four or five months in the summer. So those yearling cattle that would have come on to our places for 120, 130 days, instead of coming on to grass, they went straight to a feedlot. So the owners of those cows had to make that decision to forego the cheaper gain on grass and take them straight to the feedlot.

CONAN: And if it's this bad again next year?

HOWELL: Yeah, it's kind of double bleak if it's this bad again next year. We're - we've able to manage our forage cover so that we're going into winter in a pretty good state. If we do get similar moisture conditions to this winter next spring, I think we'll be able to still manage a similar number of cattle next year. But by that time, we will have worked through our drought reserve - our forage drought reserve - and we'll be in a position, in a tough position next year this time, as will everybody.

CONAN: Norman Dalsted, I wanted to bring you back into the conversation. Both Jim Howell and earlier Zack Jones mentioned holistic techniques. What's the distinction between that and traditional ranching?

DALSTED: Well, I think it's a more intensive managing of the range resources that they have available to them. Certainly we see where they have split pastures, and they rotate pastures on a weekly, 10-day basis so the grazing pressure isn't so significant. And that's basically it.

But you know, Neal, I want to make one other comment that I think people need to be aware of, is that, you know, there is availability of some droughty forages out there. Ranchers and farmers, if you're going to access those, make sure you have the nitrate levels checked. They're very detrimental to livestock if you start feeding, say, corn that has died in the field, and you've chopped it or bailed it.

It may have high nitrates, which is going to affect your abortions and could even affect, you know, the livelihood of the animal itself.

CONAN: I was going to ask Jim Howell, how are the animals doing in these conditions?

HOWELL: Well, on our native range grasses, which are real high quality, even in a tough year where you don't grow that much feed, and you're relying on a lot of carryover grass from the year before, grass maintains its quality pretty well, and the cattle are doing amazingly well, considering what the country looks like.

Our performance is probably a little bit under what it would be in a normal year, but not horribly so.

CONAN: Well, we wish you good luck. Thanks very much for your time.

HOWELL: All right, thank you.

CONAN: Jim Howell, CEO of Grasslands, a ranch management company, which oversees more than 100,000 acres of ranches across three states. His family also owns a 9,000-acre ranch in Colorado. He joined us on the phone from Denison in that state. Still with us is Norman Dalsted, professor of agricultural and resource economics at Colorado State University.

A couple of email questions from Justin(ph) in Wichita: Would ranchers be better off switching to buffalo and dumping cattle? In a related question from Gary(ph) in Campbell, California: Are buffalo more hardy to drought?

DALSTED: I'm not an animal scientist, but just based on my experience, buffalo definitely are probably a more hardy animal to drought than beef cattle. But there are some other issues with buffalo that - breedback being a major problem that a lot of herds that I've worked with have had, is that very often we have ranch herds that have a 95-percent breedback. With buffalo, it may be half of that.

So - and it's different handling conditions, different fencing, different corrals. Buffalo are more dangerous to work with. So, you know, while they may survive better, there are definitely some huge disadvantages with buffalo.

CONAN: All right, let's get another caller in on the conversation, and let's go to Gary(ph), Gary with us from Encino in Texas.

GARY: Hi.

CONAN: Hi. You're on the air, go ahead, please.

GARY: Oh, well, one of the things that it being dry does is it shortens up everybody's strategic horizons. There are things that you have to do right now that you would prefer not to do: sell off your cows, put off your fences, all that kind of stuff. The other kind of longer-term effect is that, generally speaking in Texas, we're not going to see a big consolidation from small family farms into large agribusiness, I don't think, the way we saw in the Midwestern farms.

What we're seeing is that family ranches are getting either purchased by people who just want to have land and are wealthy from other sources, or they get sold for, you know, 10 acre residential tracts, whatever. And it's just going to speed those processes up.

Most family ranches that I know of are not profitable. There are lots of family members that are off doing something else - they can't ranch. After a while, they don't even want to ranch anymore, and so I think that it'll also put a lot of pressure on the ones that still want to ranch from the ones that don't want to ranch and don't understand why they should have a several-million-dollar investment, or an asset worth several million dollars that makes no money.

CONAN: Norman Dalsted, is that an accurate description?

DALSTED: Yeah, I think Gary is a pretty good depiction of that, certainly been the experience, except for recent years, when we've had much better livestock prices. Certainly there's been some better returns to, you know, the resources, land, labor and capital. But, you know, based on my career, I would say that Gary's right on that the rate of return has been very, very low - and a lot of hard work.

CONAN: And is he right about consolidation, as well?

DALSTED: Yes. I think there's some things going in this country that, given the overall stock market and other investment opportunities, I think investors are looking to invest in land because we can see land values have appreciated, at least up to this point. Now, that's not taking to account the drought, but land values have been appreciating, at least here in Colorado, at a fairly significant rate.

It's not uncommon to see some land has appreciated 20 to 25 percent in the last year, maybe in the last six months. So, you know, investors are looking for those kinds of investment opportunities. And if lands become available, they certainly take advantage of it.

CONAN: Gary, can you remember the last time it rained?

GARY: Yeah, July the 4th, three years ago.

CONAN: Really?

(LAUGHTER)

GARY: Yeah. I mean, our ranch is one of the last little places in the state that still has the dark maroon extreme drought docked in the middle of it. It's pretty dry.

CONAN: I can guess that of course it had to wash out the fireworks.

GARY: Oh, no. We - there's no stinking fireworks. Actually, we really are not worried too much about fire. I kind of giggle about these people that say, it's so dry. We're going to have a fire. Hell, it's so dry, there's no fuel in South Texas.

CONAN: Well, we wish you a rain before next July 4th, OK?

GARY: Well, we're, you know, I'm waiting for El Nino. The water temperatures are there. The winds haven't started to turnaround yet. But we're looking for maybe quote-unquote, "normal rains" starting in September.

CONAN: Well, good luck with that. Thank you very much. Here's an email from Robert in Turlock, California: As a dairy farmer and dairy veterinarian involved in the industry for over 30 years, the current economic crisis in the industry intensified by the drought is really bringing even the very strong to their knees. Feed costs have soared and consume over 70 percent of the milk check. Farmers and livestock producers are a hardy bunch. A 24-hour day, 365 year - day-a-year commitment is normal.

Dealing with the elements is normal. We readily accept that. But the drought has amplified those other factors that have made dairy farming exceedingly difficult. And I wanted to ask you, Norman Dalsted, are there safety nets in place for dairy farmers and ranchers like there are, you know, for crop insurance?

DALSTED: Well, not really. You know, we certainly have a milk support price but, you know, one of the big issues that have been facing the dairies is, you know, the downturn in the market economy in late 2008, 2009 and 2010 when we had prices well below breakevens. And now, coupled - we have gone through another downturn in market prices. Now, there is some hope that the prices are going to rebound, starting later this month and into September.

But couple that with the higher feed cost have, you know, really created some significant economic problem - financial problems for a lot of dairies because they burned up a lot of their equity in '09 and early 2010, trying to survive during that timeframe. And then during that time frame, we had some rather higher feed costs as well. Not as high as they are today, but they were high. So they had not had much reprieve in the last three or four years.

CONAN: We're talking with Normal Dalsted, professor of agricultural and resource economics at Colorado State University. He's with us from KCSU, our member station in Fort Collins, Colorado. You're listening to TALK OF THE NATION from NPR News. Let's get Rich on the line, and Rich is with us from South Union in Kentucky.

RICH: Hi, Neal. Appreciate your guest today and the help that he's giving to us. I just want to represent a small farm perspective and what it's done to the family, and it's really going to be hard for me to talk about this. But we're living on borrowed money. We're not making any money anymore because all of our forests, forage and feed is burned up from the drought. And so we're buying everything to give our animals. And this is our way of life, and we don't have perhaps another year or two at best to hang on.

And so we're living not only on borrowed money but borrowed time, and it's a desperate situation. I know there's a lot of people hurting around the world, but if you let the small farmer go, our way of life as a nation will change. And it's going to be really another world that we live in where everything comes from corporate farming and small farmers like me and my family because in the summertime, my wife and my children - I have still four little children at home, 8, 6, 4 and 18 months, and all of us are in the watermelon patch or the tomato field because we've gone to - tried to go to other crops to try to save our farm.

And now the drought hit that. That's destroying that part of our farm too. So I hope that the election will bring new hope, and I hope that people will realize that this is not the present administration's fault as far as some of the economic policies that are going on. This is something that's been going on for a long time, years, and it's led to a lot of small farmers and generational farmers like me that won't be here anymore someday.

CONAN: How many dairy cows do you have?

RICH: We use to have - just five years ago, we were operating with about 500 heads. And now we're down to feeding the calves from cows that we use to have to try to hang on. In other words, we - our equity, the money that we use to have has been eaten up. We've borrowed against the farm, and the equity into that farm is now in doubt. We are down to a hundred head. And it's yearling cattle.

CONAN: Yeah.

RICH: And these are calves from the mothers that are gone.

CONAN: Norman Dalsted, how many - what percentage of farmers are in the same kind of situation that Rich is describing?

DALSTED: Well, you know, as the gentleman from Texas said, if this happens again next year, there's going to be a fairly large percentage. You know, we can survive a year or two, but continued drought conditions where you lose your forage and have some major cost element in everyone's budget - I don't care whether you're running a dairy or a feedlot or a cow-calf operation - that's going to have a dramatic impact on our agricultural economy, even with the high prices. If we have no product to sell, the high prices really don't do us any good.

CONAN: Rich, thanks very much for the call.

RICH: Thanks. I appreciate it.

CONAN: I know everybody listening wishes you and your family the best. Appreciate it. And our thanks to Norman Dalsted. Appreciate your time today.

DALSTED: You bet. Thank you.

CONAN: Norman Dalsted joined us from member station KCSU in Fort Collins, Colorado. He's a professor of agricultural and resource economics at Colorado State University. And when we come back from the break, the job of a heart transplant social worker. If you or someone in your family had a heart transplant, call and tell us your story: 800-989-8255. Email us: talk@npr.org. And stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News. Transcript provided by NPR, Copyright National Public Radio.